Monday, April 27, 2009

Peak Oil: 'We enter a new world'

Interview with 
Colin Campbell: Peak Oil is a turning point for mankind. It is a big subject... The population only doubled over the first 17 centuries of the last millennium. But then came coal followed by oil and gas, and the population increased six-fold. These new energy sources, especially oil, allowed the rapid expansion of industry, transport, trade and agriculture... It was accomplished by the growth of financial capital as banks lent more than they had on deposit, confident that Tomorrow's Expansion was collateral for Today's Debt.

But now we face the dawn of the Second Half of the Age of Oil when supply declines from natural depletion, meaning that debt goes bad (as is already happening) and the economy contracts. Today's oil supply supports 6.7 billion people, but by 2020 the supply will be enough to support no more than about 2.5 billion in their present way of life. So the challenges of using less and finding other energy sources is great.

The transition threatens to be a time of great tension. Urban conditions will become especially difficult... The position of governments is changing. They are heavily influenced by classical economics and badly advised by such practitioners for whom finding oil is just a matter of investment...

The resource in the ground of tar sand in Canada and elsewhere is huge, but extraction is slow and costly, yielding a low or even negative net energy return... The accessible world has now been thoroughly explored, such that all the major productive provinces and large fields within them have been found.

Attention now turns to the deepwater and Polar regions... The main deepwater areas have also already been found... Most of the oceans are definitely non-prospective... There are a few freak occurrences, such as Prudhoe Bay in Alaska, but generally Polar seems to be a gas-prone domain... It is unlikely to have any material impact on Peak Oil...

I doubt that renewable energies will ever replace oil and gas sufficiently to maintain the past order of things or still less allow economic growth to continue... I don't think new technologies will have any impact on the date of peak, which I estimate to have been passed in 2008... but they can of course ameliorate the subsequent decline...

The whole flimsy financial edifice has now crashed, and some of the sillier governments are now pumping yet more fictional money into the system to encourage new consumption. Such policies may briefly succeed, but will only make the subsequent crash worse.

We enter a new world, as the principal energy that drove the anomalous past two centuries heads into decline from natural depletion. This is not necessarily a doomsday message. I have known many simple people in different parts of the world who smiled and laughed, not being part of the consumer society.
Image source here.